Author/Authors :
AFZAL, MUHAMMAD University of the Punjab - Department of Economics, Pakistan , AFZAL, MUHAMMAD Lahore Leads University - Department of Economics, Pakistan , MALIK, MUHAMMAD EHSAN University of the Punjab - Department of Economics, Pakistan , MALIK, MUHAMMAD EHSAN Lahore Leads University - Department of Economics, Pakistan , BUTT, A. RAUF University of the Punjab - Department of Economics, Pakistan , BUTT, A. RAUF Lahore Leads University - Department of Economics, Pakistan , FATIMA, KALSOOM University of the Punjab - Department of Economics, Pakistan , FATIMA, KALSOOM Lahore Leads University - Department of Economics, Pakistan
Abstract :
Employing ARDL approach to cointegration, the present study validates the Romer (1993) hypothesis, i.e. the existence of the inverse connection between inflation and openness in Pakistan for the period of 1970-71 to 2008-09. A more robust inverse linkage between inflation and openness is noted in the short-run as compared to the long-run. Bidirectional causality running between inflation and openness is also found. The positive linkage between real GDP and inflation is observed that seems to be in line with the truth of Phillips curve and Okun’s law. The study recommends that the economic managers of Pakistan’s economy should adopt such policies that promote openness so that inflation can be controlled and economic growth can be accelerated.
Keywords :
Inflation , Openness , Economic growth , ARDL , Causality
